The Model Law Approach: How Ontario Could Lead the World in Providing Certainty and Fairness in Sovereign Debt Restructuring

A half-day round table meeting brought together individuals representing academia, government, financial institutions, the legal profession and civil society. Their purpose was to discuss sovereign debt crises and the possibility of Ontario taking a leading role in providing certainty and fairness in sovereign debt restructuring for countries around the world that are facing debt crises. The main theme was the feasibility of implementing a model law in Ontario that could become the choice of law for sovereign debt contracts.

Existing sovereign debt restructuring regimes are insufficient to deal with important challenges that have recently emerged in sovereign debt restructuring. The model law, if implemented, would create a new and improved regime. Advantages of the model-law regime include more certain and fair restructuring for sovereign debt, no requirement for multilateral action and creation of an oversight body. Despite these advantages, it remains necessary to satisfy federal and provincial authorities that the model law is an attractive opportunity. Further study will be undertaken to complete a cost-benefit analysis for implementation in Ontario, meet with appropriate federal and provincial authorities, and establish partnerships with countries that issue debt and may wish to do so under Ontario law.

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